2019 (10) TMI 1052 - AT - SEBI

Non-disclosure of a tax demand under Clause 36 of the Equity Listing Agreement prescribed by the Stock Exchange (hereinafter referred to as Listing Agreement ) by the Company - appellant is a private Company and is a minority shareholder in New Delhi Television Ltd. made a complaint to the stock exchange as well as to the Securities and Exchange Board of India based on which adjudication proceedings were initiated by the Adjudicating Officer under Sections 23A and 23E of the Securities and Exchange Board of India Act, 1992 read with 23-I of the Securities Contracts (Regulation) Act, 1956 (hereinafter referred to as SCRA ) - as contented the penalty of ₹ 2 crores should not have been imposed upon the Company but should have been imposed on the Key Managerial Personnel of the Company who took a conscious decision of not disclosing the event under Clause 36 of the Listing Agreement HELD THAT - We find that parallel proceedings for the same offence, namely, violation of Clause 36 of the Listing Agreement was also initiated against Key Managerial Personnel which also culminated into an order dated 16th March, 2018 being passed by the Adjudicating Officer under Section 15A(b) of the SEBI Act as well as under Section 23A(a) and Section 23E of the SCRA for violation of Regulation 13(6) of SEBI (Prohibition of Insider Trading) Regulations ( PIT Regulations for convenience) read with Clauses 2.1 and 7.0(ii) of Schedule II for Code of Corporate Disclosure Practices for Prevention of Insider Trading specified in Schedule II read with Regulation 12(2) of PIT Regulations as well as violation of Clause 36 of the Listing Agreement imposing penalties against the Key Managerial Personnel. Thus, the grievance of the appellant to the extent that the Key Managerial Personnel should be penalized has now been set at rest. The contention of the appellant that the remaining seven alleged violations should also be considered as they were part of the appeal that was filed before this Tribunal is patently misconceived - learned counsel tried to impress upon the Tribunal by placing reliance on the additional affidavit dated 17th November, 2015 contending that the said affidavit was part of the record of the Tribunal which contained the allegations and, therefore, the said allegations were required to be considered by the WTM. Contention of the appellant is patently misconceived and cannot be accepted. The order of the Tribunal dated 12th October, 2017 clearly rejected the contention of the appellant for making the representation on issues other than the issue which related to the order dated 4th June, 2015. The Tribunal rejected the modification application holding that permitting the appellant to make a representation on issues which are not the subject matter of appeal would amount to enlarging the scope of the representation beyond the grievances set out in the memo of appeal. Thus, the allegations made in the additional affidavit could not be considered. In any case, we find that the additional affidavit on which reliance has been made was filed on 17th November, 2015 much after the disposal of the appellant s appeal on 10th October, 2017 and disposal of his modification application dated 12th October, 2017. Any additional affidavit filed after the disposal of the appeal cannot form part of the memo of appeal.

Summary

Issues:
1. Delay in filing the appeal condonation.
2. Imposition of penalty on Company instead of Key Managerial Personnel.
3. Scope of representation to SEBI.
4. Rejection of modification application for enlarging scope of representation.
5. Alleged violations beyond the scope of the appeal.
6. Consideration of additional affidavit post disposal of appeal.

Analysis:

Issue 1: Delay Condonation
The delay in filing the appeal was condoned based on the reasons provided in the application, allowing the Misc. Application and Appeal No.115 of 2018 to proceed.

Issue 2: Penalty Imposition
Appellant, a minority shareholder in NDTV, challenged the penalty of ?2 crores imposed on NDTV under Clause 36 of the Listing Agreement. Appellant contended that the penalty should have been on Key Managerial Personnel for non-disclosure. Tribunal noted parallel proceedings against Key Managerial Personnel culminating in penalties, addressing the grievance.

Issue 3: Scope of Representation
Tribunal disposed of the appeal, permitting the appellant to make a fresh representation to SEBI within specified timelines, focusing on the grievances raised in the appeal concerning the non-disclosure issue under the Listing Agreement.

Issue 4: Rejection of Modification Application
A modification application was filed to alter the Tribunal's order, which was rejected. The Tribunal dismissed the application as it sought to expand the scope of representation beyond the appeal's grievances, emphasizing the need to adhere to the original issues raised.

Issue 5: Alleged Violations
WTM rejected the representation, finding that only two violations within the appeal's scope warranted consideration, while the remaining alleged violations were beyond the Tribunal's directions. The WTM passed appropriate orders on the violations within the appeal's purview.

Issue 6: Additional Affidavit
Appellant's reliance on an additional affidavit post-appeal disposal was dismissed. The Tribunal held that considering allegations beyond the appeal's scope would enlarge the representation improperly. Any affidavit filed after appeal disposal cannot be part of the appeal record.

In conclusion, the appeal was dismissed as it lacked merit, with the Tribunal upholding the penalties imposed on NDTV and Key Managerial Personnel for violations under the Listing Agreement and insider trading regulations. The judgment emphasized adhering to the original appeal issues and timelines for representations to maintain the appeal's scope and integrity.